Long Term Insurance Act, 1998 (Act No. 52 of 1998)

Regulations

Regulations under the Long-term Insurance Act, 1998

Part 6 : Binder Agreements

6.4 Requirements, limitations and prohibitions relating to any consideration that may be offered or provided to a binder holder, and any participation by a binder holder in profits attributable to the policies referred to in a binder agreement
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(1)An insurer may pay a binder holder a fee for the services rendered under the binder agreement, which fee must be reasonably commensurate with the actual costs of the binder holder associated with rendering the services under the binder agreement, with allowance for a reasonable rate of return for the binder holder.

 

(2)Any fee referred to under subregulation (1) payable to a non-mandated intermediary that may settle claims or determine the value of policy benefits under a binder agreement, may not constitute or be based on a percentage of the difference between an amount claimed or the maximum value of policy benefits payable under a policy and the policy benefits actually provided to a policyholder in settlement of a claim.

 

(3)A non-mandated intermediary that is a binder holder, in respect of the services rendered under the binder agreement, may not directly or indirectly receive or be offered any share in the profits of the insurer attributable to the type or kind of policies referred to in the binder agreement.

 

(4)An administrative FSP or underwriting manager, in respect of the services rendered under the binder agreement, may share in the profits of the insurer attributable to the type or kind of policies referred to in the binder agreement.

 

(5)Any fee referred to under this regulation 6.4, payable to a non-mandated intermediary that is a binder holder, must be disclosed to a policyholder, which disclosure must be included in the disclosures contemplated under regulation 6.3(1)(g).